Monthly Archives: November 2013

The EU has today published a new Decision and Implementing Regulation re-listing the Islamic Republic of Iran Shipping Line (IRISL), and a number of companies alleged to be connected with IRISL, on the EU’s sanctions measures concerning Iran. This is the first EU listing decision since the announcement of the Joint Plan of Action on Sunday – see previous blog. HM Treasury has published a notice on these new measures.

We previously reported that IRISL (and a number of other companies) won its application to annul its designation in the General Court of the European Union on 16 September 2013. That judgment has not been appealed to the European Court of Justice. We also reported that the European Council has re-listed a number of Iranian companies and individuals that also won their applications for annulment, including shipping agency companies HTTS and Good Luck Shipping (blog on Good Luck Shipping’s case here). As explained here, the Council then amended the criteria for inclusion in the EU’s Iran sanctions list to widen the categories of targeted individuals and entities.

Judgment will be handed down in Luxembourg on 12 December 2013 in the case of Nabipour & Ors, an application for annulment by 11 individuals said to be connected with IRISL or its subsidiaries. Maya Lester acts for IRISL and the other applicants in IRISL’s case, Good Luck Shipping, and the individuals in the Nabipour case.

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The Secretary of State for Foreign and Commonwealth Affairs, William Hague, made a statement in the House of Commons yesterday (25 November 2013) explaining what has been agreed as regards European sanctions against Iran (see previous blog). See analysis of this speech by Ryan Goodman (NYU law school) on the Just Security blog.

What will not change for now

1) The bulk of sanctions: “the bulk of international sanctions on Iran will remain in place. That includes the EU and US oil embargo, which restricts oil purchases from Iran globally, and sanctions on nuclear, military-related or ballistic missile-related goods and technology. It includes all frozen revenue and foreign exchange reserves held in accounts outside Iran and sanctions on many Iranian banks, including the Central Bank of Iran, which means all Iranian assets in the US and EU remain frozen, apart front the limited repatriation of revenue agreed under this agreement”.

2) Targeted sanctions: Iranian “leaders and key individuals and entities will still have their assets in the EU and US frozen and be banned from travelling to the EU and US, and tough financial measures, including a ban on using financial messaging services and transactions with European and US banks, also remain in place. Those sanctions will not be lifted until a comprehensive settlement is reached, and we will enforce them robustly. That ensures that Iran still has a powerful incentive to reach a comprehensive solution”.

What will change now

The EU will prepare to suspend the following sanctions (sanctions will be “suspended – not lifted or abolished”) “which we will hope will be concluded by the end of January”:

1) Oil imports: It is “proposed” that the EU and US “will suspend sanctions on oil-related insurance and transport costs, which will allow the provision of such services to third states for the import of Iranian oil. We will also suspend the prohibition on the import, purchase or transport of Iranian petrochemical products and suspend sanctions on Iranian imports of gold and precious metals. But core sanctions on Iranian oil and gas will remain in place”.

2) Financial authorisation thresholds: It is “intended” that the EU will “increase by an agreed amount the authorisation thresholds for financial transactions for humanitarian and non-sanctions trade with Iran. The EU’s Council of Ministers will be asked to adopt legislation necessary to amend those sanctions and the new provisions would then apply to all EU Member States.”

3) Release of frozen assets “on a one-off basis”. The total value of the sanctions relief is estimated at $7 billion over the six-month period.

4) “There will be no nuclear-related sanctions adopted by the UN, EU and US during that period”.

A “joint commission” of the E3+3 countries and Iran will be established to monitor implementation of these measures.

What will happen when a “comprehensive solution” is reached

If a “comprehensive solution” is agreed, it “would lead to the lifting of all UN Security Council sanctions as well as multilateral and national sanctions related to Iran’s nuclear programme”. The aim is to reach this solution “within one year”.

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The United Nations and European Union first imposed sanctions on Somalia in 2002, consisting first of an arms embargo, and later an asset freeze and travel ban in the EU on “those who seek to prevent or block a peaceful political process”, and on those who have violated the arms embargo or obstructed the delivery of or access to humanitarian assistance to Somalia.

In July 2013 the UN Security Council adopted a Resolution providing a derogation from the arms embargo for equipment intended to support or be used by the UN Assistance Mission in Somalia and the EU Training Mission in Somalia. The EU has now adopted new EU measures providing for the same derogation: a Regulation and Decision of 15 November 2013.

Links to the EU’s sanctions against Somalia are on the ‘Sanctions in Force’ section of this blog.

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Iran has reached an agreement with the European Union and the “P5+1” or “EU3+3” countries (China, France, Germany, the Russian Federation, UK and USA) on a “joint action plan” towards lifting sanctions in exchange for undertakings about Iran’s nuclear programme.

The Joint Plan of Action, agreed by foreign ministers in Geneva today (24 November 2013), sets out “an approach towards reaching a long term comprehensive solution”. The long term solution, in which the Joint Plan of Action is the first step, aims to result in “the comprehensive lifting of all UN Security Council sanctions, as well as multilateral and national sanctions relating to Iran’s nuclear programme” while ensuring that “Iran’s nuclear programme will be exclusively peaceful” and in which Iran “reaffirms that under no circumstances will Iran ever seek or develop any nuclear weapons”.

The plan of action consists of a series of measures to be taken for an initial 6 month period. Iran agrees on a number of undertakings relating to its nuclear programme, and “in return” are a number of “voluntary measures” easing sanctions against Iran.

The White House has published a fact sheet giving some commentary on what has been agreed. It describes these agreements on sanctions as providing “limited, temporary, targeted and reversible relief while maintaining the bulk of [US] sanctions, including the oil, financial and banking sanctions architecture” and states that “if Iran fails to meet its commitments, we will revoke the relief”. The White House states that “without this phased approach, the international sanctions coalition would begin to fray because Iran would make the case to the world that it was serious about a diplomatic solution and we were not. We would be unable to bring partners along to do the crucial work of enforcing our sanctions”.

The agreements on sanctions are as follows:

No new “nuclear-related” UN Security Council or EU sanctions. The same goes for US sanctions “acting consistent with the respective roles of the President and the Congress”.

The “suspension” of EU and US sanctions on Iran’s petrochemical exports and gold and precious metals, and on “associated” insurance, transportation and financial services”.

The “suspension” of US sanctions on Iran’s auto industry and on “associated services”. The White House press release states that the suspension of US sanctions on gold and precious metals, Iran’s auto sector and Iran’s petrochemical exports will “potentially” provide Iran with “approximately $1.5 in revenue”.

The “suspension” of EU and US sanctions on insurance and transportation services associated with Iran’s crude oil sales, to enable “Iran’s current customers to purchase their current average amounts of crude oil” and to enable “the repatriation of an agreed amount of revenue held abroad”. The White House describes this as permitting purchases of Iranian oil “to remain at their currently significantly reduced levels”, and states that “$4.2 billion from these sales will be allowed to be transferred in instalments if, and as, Iran fulfils its commitments”.

Licenses for the supply and installation in Iran of spare parts for safety of flights for Iranian civil aviation and associated services.

An increase on the EU “authorisation thresholds” for transactions for “non-sanctioned trade” to an agreed amount.

The establishment of a “financial channel to facilitate humanitarian trade for Iran’s domestic needs using Iranian oil revenues held abroad”. Humanitarian trade is defined as “transactions involving food and agricultural products, medicine, medical devices, and medical services incurred abroad” involving specified foreign banks and non-designated Iranian banks. This channel could also enable “transactions required to pay Iran’s UN obligations” and “direct tuition payments to universities and colleges for Iranian students studying abroad, up to an agreed amount for the six month period”. The White House states that “humanitarian transactions have been explicitly exempted from sanctions by Congress so this channel will not provide Iran access to any new sources of funds”.

The White House press release includes a section entitled “putting limited relief in perspective”, which states that “we expect the balance of Iran’s money in restricted accounts will actually increase, not decrease, under the terms of this deal”. “The vast majority of Iran’s approximately $100 billion in foreign exchange holdings are inaccessible or restricted by sanctions. In the next six months Iran’s crude oil sales cannot increase”. During the first phase, “we will continue to vigorously enforce our sanctions against Iran, including by taking action against those who seek to evade or circumvent our sanctions”.

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The Iranian Oil Company (IOC) and BP are reported to be planning a resumption of production at the Rhum gas field in the North Sea, despite the fact that the Tehran-based producer remains the subject of EU sanctions. The field was shut down in 2010 to comply with international sanctions against Iran but following a deal with the US, EU and UK Government, a spokesman for BP recently said that the field could be operational again in six to nine months.

The high temperature, high pressure field has in the past contributed approximately 4% of the UK’s gas production, at around 5.4 million cubic meters of gas a day. The UK Government has confirmed its support, noting that there is a risk of environmental damage if the field remains inactive, as well as the potential destruction of the field’s value. A further consideration concerns the adjoining older Bruce gas field, which would be scheduled for closure sooner without the production from Rhum.

The joint venture between BP and IOC dates back to 1973. Gas was discovered in 1977 but production only commenced at the field in 2005, due to complications and expense in respect of the extraction process. The facility cost approximately £350 million to build.

The UK Government has said it will ring fence all IOC revenue from the Rhum field in a frozen account, so as to comply with the EU Regulation that limits investment and the provision of economic resources to listed entities. EU officials have reportedly confirmed that this is the only example of a Western-Iranian joint venture of its kind within the European Union. UK and EU officials previously won an effective exemption to US sanctions for the $40 billion BP-led Shah Deniz natural-gas project in the Caspian Sea off the coast of Azerbaijan. A unit of the National Iranian Oil Co. holds a 10% stake in that project.

We previously reported that on 6 September 2013 a number of companies that were added to the EU’s restrictive measures against in Iran in July 2010 won their applications to annul their listings in the European Court (see previous blog). The European Council has today (16 November 2013) published new measures re-listing all of them on the basis of new statements of reasons. The new measures taken form of a Decision and Implementing Regulation.

The companies that won their cases and have now been re-listed are: Persia International Bank Plc, Export Development Bank of Iran, Iran Insurance Company, Post Bank Iran, Bank Refah Kargaran, Good Luck Shipping LLC, and Iranian Offshire Engineering & Construction Co. One individual has also been re-listed (Naser Bateni), who is said to act on behalf of the Islamic Republic of Iran Shipping Line (IRISL), which also won its application for annulment in September – see previous blog.

The Council has also listed Hanseatic Trade Trust & Shipping (HTTS) again, which has now won two application for annulment (see previous blog), and has given new reasons for listing the Belarus based bank Onerbank ZAO (originally listed in May 2011). The Council states that Qualitest FZE, which won its case on 5 December 2012 (judgment here), is no longer on the sanctions list (the UK published a notice making this clear in April – see previous blog).

The listed companies and people have two months to apply again to annul their designations if they choose to do so. HM Treasury published a notice on these new measures on 18 November 2013.

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About this blog

This blog sets out the latest developments in the law of European Union sanctions.

We include all kinds of European Union sanctions: those that derive from the United Nations and autonomous sanctions, measures designed to combat terrorist financing, nuclear proliferation, and human rights violations in third country regimes, and those that seek to restore misappropriated assets.

The 'sanctions in force' section contains an up-to-date list of European sanctions in force. The blog covers developments in the case law of the European Court of Justice and General Court, and courts in the United Kingdom. We aim to include material from other countries too, including the USA.